Vietnam’s New Foreign Indirect Investment Regulations Explained – Securities

On April 29, 2025, the State Bank of Vietnam (SBV) issued
Circular No. 03/2025/TT-NHNN (Circular 03), which provides detailed
guidance on the opening and use of Vietnamese dong (VND) accounts
by non-resident foreign investors engaging in indirect investment
activities in Vietnam. Circular 03, which took effect on June 16,
2025, amends Circular No. 06/2019/TT-NHNN of the SBV on the
management of foreign exchange for foreign direct investment
activities in Vietnam (Circular 06) and replaces Circular No.
05/2014/TT-NHNN of the SBV guiding the opening and use of indirect
investment capital accounts for implementation of foreign indirect
investment activities in Vietnam (Circular 05).

Below are some of the key points of Circular 03.

Change of Account Name

Circular 03 renames “indirect investment capital
account” to “indirect investment account” (IIA).
This change aligns with the terminology used in other legislation,
ensuring consistency across Vietnam’s legal framework governing
foreign exchange and investment activities. Additionally, by
removing the word “capital,” the new term better
encompasses the full range of transactions that may be conducted
through these accounts, such as share transfer and other forms of
indirect investment-related activities. This helps prevent
misinterpretation and facilitates compliance for foreign investors
operating in Vietnam.

Account Types

Circular 03 clearly delineates account types and investor
residency status as follows:

  • For non-resident foreign investors: The opening and
    use of investment accounts in VND is for carrying out transactions
    related to indirect investment activities.

  • For resident foreign investors: Credit and debit
    transactions are made through payment accounts in VND in accordance
    with relevant laws.

Additional Permitted Uses of IIAs

In addition to the cash inflows and outflows authorized under
Circular 05, Circular 03 introduces more cash transactions that can
be conducted via IIAs. These include:

  • Receiving interest and other legal income when conducting stock
    purchase transactions that do not require sufficient funds when
    placing orders by foreign institutional investors under the
    securities law.

  • Receiving funds for deposits or collateral related to stock
    purchases, as well as refunds of such deposits.

  • Receiving transfers from previously opened IIAs at other
    licensed banks.

  • Payment of losses and other expenses incurred from purchasing
    securities that do not require sufficient funds when placing orders
    by foreign institutional investors.

  • Payment of fees, charges, taxes, administrative penalties, and
    other expenses associated with foreign indirect investment
    activities in Vietnam.

These changes aim to improve transparency for foreign investors
by clearly defining the purposes of money transfer orders, as well
as enable authorized banks to verify, document, and process
transactions more effectively.

Fixing Mismatch

Circular 03 updates Circular 06 to align with the foreign
ownership thresholds provided in the current Law on Investment.
Specifically, it changes references from “51% or more” to
“more than 50%,” and from “below 51%” to
“equal to or below 50%,” fixing a mismatch in the
classification of foreign ownership thresholds.

Additionally, Circular 03 introduces a 12-month transitional
period from its effective date (i.e., by June 16, 2026), allowing
companies previously exempt under Circular 06 time to open a Direct
Investment Capital Account (DICA). During this period, foreign
investors may continue using their existing IIAs to carry out
capital contributions and share acquisition transactions until the
new DICA is officially opened.

Simplified IIA Opening Procedures

Under the prevailing law, documents issued in foreign countries
must be legalized for use in Vietnam. However, Circular 03 removes
this legalization requirement for documents submitted by foreign
investors to open IIAs for investment in the Vietnamese securities
market, allowing them to submit notarized and certified documents
under Vietnamese law or foreign law within 12 months of the
submission date of the IIA opening application.

The translation of foreign-language documents into Vietnamese is
also no longer required, but is subject to mutual agreement between
licensed banks and foreign investors. However, licensed banks must
ensure the accuracy and compliance with Circular 03 of
foreign-language documents, and provide certified or notarized
translations if requested by the competent authorities.

These reforms aim to streamline the administrative process and
shorten the timeline for the document preparation of foreign
investors to open IIAs.

Opening Multiple IIAs

Under Circular 05, foreign investors were only allowed to open
one IIA for their indirect investment activities. This could cause
difficulties for foreign investors (especially investment funds or
organizations managed by many fund management companies) to
separately manage their investment portfolios.

To address this issue, Circular 03 permits multiple IIAs to be
opened by foreign investors corresponding to the different issued
securities trading codes, subject to regulatory conditions and
applicable to the following subjects:

  • Foreign securities companies;

  • Foreign investment funds;

  • Foreign organizations managed by many foreign fund management
    companies; and

  • Investment organizations under foreign governments, or
    financial or investment organizations under an international
    financial organization of which Vietnam is a member.

These amendments will facilitate foreign investors in monitoring
and managing their investment portfolios on the Vietnamese stock
market.

Other Changes

Circular 03 adds the following new principles:

  • Opening a joint IIA by two or more foreign holders is not

  • All money transfer orders related to foreign indirect
    investment in Vietnam must specify the purpose of the transfer.
    This requirement enables commercial banks to verify, compare, and
    retain relevant documentation, thereby ensuring proper execution of
    the transaction in accordance with regulatory guidelines.

Circular 03 also removes the list of indirect investment forms
in Vietnam (e.g., capital contribution and acquisition, bonds or
other securities trading, etc.) that was specified in Circular
05.

Outlook

Circular 03 aims to significantly modernize Vietnam’s
foreign exchange management, address evolving challenges in foreign
indirect investment, and promote the country’s appeal to
foreign investors. This is expected to be a catalyst for further
reforms in Vietnam’s financial and investment sectors.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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